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Commodities Briefing 09.Apr 2014

Posted on 09 April 2014 by VRS |  Email |Print

Banks pulling out of commodity trading because of rules on proprietary investing and capital requirements are pushing raw-material trade into less regulated and more opaque territory, investor Eric Schreiber said.
Regulations such as Basel III and the Dodd-Frank Act have a “significant impact” on banks, pushing commodity business to trading houses, according to Schreiber, the former head of commodities at Swiss wealth manager Union Bancaire Privee………………………………………..Full Article: Source

Posted on 09 April 2014 by VRS |  Email |Print

In January 2014, the Federal Reserve issued an advance notice of proposed rulemaking (ANPR) in which it raised questions regarding increased limits and restrictions on the physical commodities activities of financial holding companies (FHCs) under the Bank Holding Company Act of 1956.
In the ANPR, the Fed cites recent environmental events as a reason for its review of physical commodities activities by FHCs. The notice cites the Deepwater Horizon oil spill in the Gulf of Mexico, the incident at the Fukushima Daiichi nuclear power plant, and other environmental events to support its concerns that “the costs and liability related to physical commodity activities can be difficult to limit and higher than expected”………………………………………..Full Article: Source

Posted on 09 April 2014 by VRS |  Email |Print

Following three decades of rapid growth in China of about 10 percent a year on average, the recent slowdown has raised many concerns. Among them are the implications for global commodity markets: China’s demand rebalancing may lead to lower commodity consumption and prices and thus create adverse spillovers to commodity exporters.
The analysis finds that China’s commodity consumption is unlikely to have peaked at current levels of income per capita. Moreover, the pattern of its commodity consumption closely follows the earlier paths of other rapidly growing Asian economies. However, recent shifts in the composition of China’s commodity consumption are consistent with nascent signs of demand rebalancing—private durable consumption has started to pick up, while infrastructure investment has slowed………………………………………..Full Article: Source

Posted on 09 April 2014 by VRS |  Email |Print

Crude oil sourced in the United States is cheaper and therefore means less pain at the pump for American drivers. When adjusted for inflation, however, the price for a gallon of regular unleaded gasoline is still high because of international dynamics, AAA said Monday.
“Cheaper domestic crude has a significant effect on the price most of us pay at the pump,” AAA spokesman Michael Green told Oilprice. “U.S. refineries have access to cheaper crude oil than their overseas competitors, which provides a lucrative business advantage.”……………………………………….Full Article: Source

Posted on 09 April 2014 by VRS |  Email |Print

Crude prices are stable and the market has enough supply to meet demand, even amid geopolitical unrest in Europe and the Middle East, OPEC Secretary-General Abdalla El-Badri said.
The OPEC basket, a weighted average of the main export grade from each of the group’s 12 members, has stayed above $100 for a record 200 days, according to data from the Organization of Petroleum Exporting Countries’ Vienna-based secretariat compiled by Bloomberg………………………………………..Full Article: Source

Posted on 09 April 2014 by VRS |  Email |Print

Azeri analyst Elmur Soltanov thinks that the world price on oil might decrease for the next five years to the margin of $70-80. Many oil-producing countries are increasing oil extraction, which will eventually bring down the world oil price so that the current $100 USD paid for oil might degrease to around $75-80.
Economies of the oil-producing countries may face problems particularly in the countries where export of oil ensures the highest income. This will particularly hurt Russia’s economy if the West refuses to buy Russian gas and oil as a sanction targeted against Moscow for its occupation of Crimea………………………………………..Full Article: Source

Posted on 09 April 2014 by VRS |  Email |Print

Spot prices for West Texas Intermediate crude oil are expected to average at $95.60 a barrel this year — up from a previous forecast of $95.33 a barrel, according to the monthly Short-Term Energy Outlook report issued Tuesday by the Energy Information Administration.
The EIA also lowered its 2014 price forecast for Brent crude, the European oil benchmark, to $104.88 a barrel from $104.92 in the previous report, and said it expects an average 2015 price of $4.11 per million British thermal units for natural gas, down from the $4.14 previously expected………………………………………..Full Article: Source

Posted on 09 April 2014 by VRS |  Email |Print

Germany’s multi-billion-euro exemption of heavy industry from green energy charges does not violate EU rules on industry rebates. Berlin and Brussels have agreed to keep the energy price breaks, but on a smaller scale.
After months of wrangling, the German government and the European Commission had reached an agreement on the country’s industry exemptions to renewable energy surcharges, German media reported Tuesday, quoting sources close to the talks………………………………………..Full Article: Source

Posted on 09 April 2014 by VRS |  Email |Print

The coal industry has a public-relations problem: Although coal remains the biggest source of fuel for generating electricity in the U.S., its adversaries say it’s just too dirty and just too damaging to the environment.
Peabody Energy Corp.’s Gregory Boyce, chief executive of the largest U.S. coal producer, sees things differently. In an interview with Wall Street Journal Assistant Managing Editor John Bussey, Mr. Boyce argued that reducing emissions isn’t the only thing the world should be worrying about………………………………………..Full Article: Source

Posted on 09 April 2014 by VRS |  Email |Print

Ukraine has announced that they have taken back control of the facilities which were overrun by the pro-Russian forces recently. There are still those calling for Russia to send the troops into eastern Ukraine, but after the annexation of Crimea we have to imagine that Russia has very little political capital left to use for another deployment into Ukraine.
It made some sense to annex Crimea, however the argument to annex other areas of Ukraine is much weaker and would surely draw the ire of Europe and its allies. The tensions in Ukraine continue to buoy the gold market with the precious metal rising back above the $1,300/ounce level………………………………………..Full Article: Source

Posted on 09 April 2014 by VRS |  Email |Print

Hedge funds and other speculators misjudged gold prices for a second time in three weeks. Just after the investors sold bullion holdings for a second consecutive week, a disappointing U.S. jobs report sparked the biggest rally in prices since mid-March. Their funds fared better in the five preceding weeks, correctly adjusting wagers 80 percent of the time.
Investors who were anticipating gold’s 2014 rebound would fizzle had reason to be confident at the start of last week. As U.S. equities surged to a record, bullion slid to a seven-week low on April 1 as fewer traders saw the appeal of the haven asset………………………………………..Full Article: Source

Posted on 09 April 2014 by VRS |  Email |Print

The demand for the precious metal in Asia is truly phenomenal! In smaller countries like Indonesia, Thailand and Vietnam, consumption of gold totaled 300 tonnes in 2013, and according to Bloomberg, in 2014 mainland Chinese buyers purchased a total of 125 tonnes in February (including scrap). This number tops the 102.6 tonnes purchased in January and 97.1 tonnes purchased a year ago.
As I wrote about in February, Switzerland plays a role in the movement of physical gold into Asia as well. Home to many of the big gold refiners, Switzerland released monthly gold trade data this year for the first time in over 30 years, with the report showing that 80 percent of shipments went straight into Asia………………………………………..Full Article: Source

Posted on 09 April 2014 by VRS |  Email |Print

Dubai’s gold trade volumes should continue to grow so long as the emerging middle classes in Asia continue to grow and prosper, forecasts John Hathaway, US-based analyst and portfolio manager for Tocqueville Asset Management.
“Dubai is a distribution point to all parts of Asia and that level of flow is dependent on the prosperity of the emerging middle classes in various Asian economies. So, as long as that continues I can’t see anything stopping that flow,” added Hathaway………………………………………..Full Article: Source

Posted on 09 April 2014 by VRS |  Email |Print

The global zinc market has potential to add a further 1.9 million mt of demand from new initiatives over the next three years, according to Stephen Wilkinson, director of the International Zinc Association Tuesday.
Speaking at the Metal Events 6th International Zinc conference in Dubai Wilkinson said that zinc is essential for human health and that one of the key areas of demand will come from the addition of zinc to fertilizers. He laid out data that showed vastly improved crop yields when zinc is added to the fertilizer blend………………………………………..Full Article: Source

Posted on 09 April 2014 by VRS |  Email |Print

The global copper market is expected to post a moderate surplus this year, resulting in copper prices expected to remain under pressure, the fifth instalment of Thomson Reuters’ ‘GFMS Copper Survey 2014’ had found.
The average yearly price was expected to fall below $7 000/t in 2014 for the first time since 2009, with a test of the $6 000/t level deemed likely over the second half, the report had found………………………………………..Full Article: Source

Posted on 09 April 2014 by VRS |  Email |Print

A surge in mine production could send copper prices down to $6,000 a tonne later this year – a level last seen in the immediate aftermath of the global financial crisis, according to a leading metals consultancy.
The price of the red metal has already fallen 10 per cent this year, to $6,675 a tonne, on concerns about a slowdown in China, which accounts for 40 per cent of global copper demand. But in its annual copper survey, Thomson Reuters GFMS predicts further price weakness and more pain for producers………………………………………..Full Article: Source

Posted on 09 April 2014 by VRS |  Email |Print

Global ETF and ETP assets reached a new record high of $2.45 trillion at the end of Q1 2014, according to ETFGI, a London-based consultancy. Flows into ETFs and ETPs rebounded in March gathering net inflows of $11.0 billion which, when combined with a small positive market performance in the month, helped lifts assets closer towards the psychological $2.5 trillion mark.
According to ETFGI, there are now 5,204 ETFs/ETPs, with 10,219 listings, from 222 providers on 59 exchanges globally………………………………………..Full Article: Source

Posted on 09 April 2014 by VRS |  Email |Print

After three underperforming years, investors are now looking closely at commodities which is also evident from the inflows into commodity exchange traded products (ETP) inflows in January and February 2014, according to Nick Brooks, Head of Investment Strategy at ETF Securities Ltd.
In an interview to Sreekumar Raghavan, Managing Editor of Commodity Online, he said that sentiments have turned positive on precious metals and after holding extremely negative sentiments last year, investors now have taken a balanced outlook. Gold ETPs have also witnessed positive inflows this quarter except in January when it had fallen by a negative $946 mn in Assets Under Management (AUM)………………………………………..Full Article: Source

Posted on 09 April 2014 by VRS |  Email |Print

Timing the market has fascinated, frustrated, and confused the heck out of countless investors. Whether you’re a self-directed trader or a professional money manager, it’s very likely you’ve found yourself looking through charts, thinking: if only I could’ve had a piece of that trend! While it’s true that past performance is no guarantee of future returns, there is still a great deal of insights to be extracted from analyzing past booms and busts on Wall Street.
Below we take a stroll down memory lane with perfect hindsight and look at some of the best ETF trades of all time, highlighting their performance as well as any noteworthy lessons from each case………………………………………..Full Article: Source

Posted on 09 April 2014 by VRS |  Email |Print

The S&P 500 scored gains of just 1.3% in first-quarter 2014. In comparison, the Thomson Reuters/Core Commodity CRB Index ended the first quarter with gains of 8.7%. This marked the 19-commodity index’ best performance since Sep 2012, as commodities turned out to be among the best investment options in the quarter. Commodities were reported to have secured the best gains among all asset classes since 2012.
The gains have come through a period when Chinese economic data have mostly been dismal, the Federal Reserve kept alive the trend of reducing its bond buyback program and the Russia-Ukraine crisis added to the volatility………………………………………..Full Article: Source

Posted on 09 April 2014 by VRS |  Email |Print

Commodity futures trading volumes in India fell 40.49 percent in the year to March 2014, its second straight year of decline, the market regulator said on Tuesday.
In value terms, futures trading at commodity exchanges fell to 101.44 trillion rupees in the first twelve months from April 2013 from 170.46 trillion rupees a year ago, the Forward Markets Commission said in a statement on its website………………………………………..Full Article: Source

Posted on 09 April 2014 by VRS |  Email |Print

The London Metal Exchange, the world’s largest industrial metals marketplace, wants to introduce an aluminum premium contract as early as the end of this year, said Chief Executive Officer Garry Jones.
The contract will be 25 metric tons in size and will involve a swap of warrants, or bearer documents for a specific lot of metal, according to a draft of specifications seen by Bloomberg. Consumers usually pay a premium to the exchange price for metal in specific locations………………………………………..Full Article: Source

Posted on 09 April 2014 by VRS |  Email |Print

The head of the Bank of Japan today cast doubt on Bitcoin’s future, saying the scandal-plagued digital unit “cannot be a currency” unless it proves its reliability.
The computer-generated currency has suffered a series of blows since February when the Tokyo-based Bitcoin trading exchange MtGox filed for bankruptcy, after admitting it had lost about half a billion dollars of the virtual unit. Unlike most currencies, Bitcoin is not backed by a government or central bank………………………………………..Full Article: Source

Posted on 09 April 2014 by VRS |  Email |Print

The Monetary Authority of Singapore will probably keep favoring modest currency gains as it seeks to curb inflation while supporting economic growth.
All 23 analysts polled by Bloomberg News say the MAS, which uses the exchange rate rather than borrowing costs as its main policy tool, will let the Singapore dollar stay on a “modest and gradual” appreciation path. Gross domestic product probably slowed to an annualized 0.6 percent last quarter from 6.1 percent in the three months through December, a separate survey showed………………………………………..Full Article: Source

Posted on 09 April 2014 by VRS |  Email |Print

Fred Krupp goes about his business as head of the Environmental Defense Fund by applying leverage where the interests of business and the environment intersect. He sat down with The Wall Street Journal’s John Bussey to discuss climate change.
Pew took a poll not long ago and found 65% of the American public favor pollution limits on power plants, which included a majority of Republicans, 52%, and 67% of independents. And when you look at people under 30, another poll found 85% want carbon limits on power plants………………………………………..Full Article: Source

Posted on 09 April 2014 by VRS |  Email |Print

A trading system for carbon is needed to reduce carbon levels, including incentives at a private level, according to Alan Matthews, Professor Emeritus of European Agricultural Policy in the Department of Economics at Trinity College, Dublin, Ireland.
Soil contains a huge amount of carbon, twice as much as in the atmosphere in the 0-30 cm layer alone, he said, however continuous cultivation over a long period has reduced stocks of soil organic carbon (SOC) often to dangerously low levels………………………………………..Full Article: Source

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